HOUSING INDEX

June 2014
Namibi a Records 2
nd
Highest House Price Growth
in the World
Published by: FNB Namibia Address: First City Centre, Levinson Arcade, Windhoek
Authored by: Namene Kalili Tel: +264 61 2992725 Fax: +264 61 225994
Methodology: The FNB House Price Index is based on the median house price from Deeds Office data. Disclaimer: The
information in this publication is derived from sources which are regarded as accurate and reliable, is of general nature
only, does not constitute advice and may not be applicable to all circumstances.

House prices increased by 29% year on year to bring the FNB House Price Index to 234.7 index points through
J une as house prices continue to increase in 2014 at a much faster pace than the long term trend over the past
seven years. Despite various policy interventions to increase new housing supply, volumes continue to trend
downwards as fewer properties are traded from month to month and demand for properties continues to
increase. It is this increased disparity between supply and demand that is driving house prices upwards so
much so that Namibia had the second highest house price increase in the world after Dubai. At a median price
of N$774k, households must earn at least N$23k per month to afford an average property. This is almost three
times the average household income for urban households in Namibia. Based on our calculations, the income
requirement for the lower price segment came in at N$15k per month. Less than 10% of the households in the
country can afford a property in the lower price segment. Land delivery remained weak at 61 stands mortgaged
through J une, with the trend beginning to point downwards. Land prices were 23% higher and averaged N$140k
for a 410m stand. A further 393, 800m of land was mortgaged by developers, with a maximum potential for
920 free standing homes, which brings the cumulative house delivery potential to 7,950 freestanding homes for
2014. However, developer activity has not filtered meaningfully into the new housing supply numbers as overall
volumes continue to trend downwards.

234.7
118.9
40
90
140
190
240
290
Smoothed Weighted National Housing Index
(base = January 2008)
Value Index Volume Index
5.8%
26.0%
-10%
0%
10%
20%
30%
Real Change in House Prices
300 000
400 000
500 000
600 000
700 000
800 000
900 000
1 000 000
1 100 000
Central House Prices
300 000
400 000
500 000
600 000
700 000
800 000
900 000
1 000 000
Coastal House Prices
House Prices
Central property prices increased by 20%
year on year to N$810k, with most of the
upward price pressure coming from the
upper price segment, where property prices
rose by 32% year on year to N$2,333k per
unit. Property prices in the lower to middle
price segment also increased, but at more
modest rates of between 4 and 14 percent
year on year on account of higher supply.
Volumes increased by 47 and 86 percent,
respectively in the lower and middle price
segment due to an increase in new house
construction during J une. Despite the
increase in volumes, prices continued to
increase, indicative of the excess demand
in the market. The year to date data
indicates that house prices in Windhoek are under mounting price pressure as property prices in the capital
have fallen by 13% in 2014, a trend that is evident in Dorado Park, CBD, Pioneers Park and Academia. At a
median price of N$850k, Windhoek no longer has the highest median price in the country. Okahandja property
prices continued to march upwards, where property prices have increased by 26% in the year to date, while
Gobabis property prices moved sideways. Land delivery weakened even further to 12 stands, with land prices
remaining upwardly sticky N$672/m or N$198k for a 295m stand. Developers mortgaged a further 12,800m of
land with a maximum yield potential for 30 free standing homes and therefore very little short term supply relief
in the central property market.
Coastal property prices increased by 25%
year on year to a median price of N$956k
and although property prices continue to
increase, near term data shows that this
price growth is tapering as the market
moves towards its August peak. Coastal
property prices tend to track the tourism
season and hence coastal property price
growth was concentrated in the upper price
segment, where property prices increased
by 28% year on year to end the month at a
median price of N$2,223k. Property prices
in the middle price segment remained on
the upward trajectory increasing by 12%
year on year to N$1,200k while property
prices in the lower price segment increased
by a modest 5% year on year to N$542k. Year to date data shows that Walvis Bay property prices have risen by
46% year to date and decelerating. Swakopmund property prices have risen by 16% year to date and
decelerating and Henties Bay property prices have increased by 8% and decelerating. Volumes were up 19% at
the cost on account of very strong volume growth in the middle price segment. Land delivery decreased to 15
vacant stands mortgaged at an average price of N$144/m, which was 15% higher than a year ago. Developers
mortgaged a further 103,650m of land with a maximum yield potential for 240 free standing homes.

200 000
250 000
300 000
350 000
400 000
450 000
500 000
550 000
Northern House Prices
200 000
300 000
400 000
500 000
600 000
700 000
800 000
Southern House Prices
Northern property prices increased by
28% year on year to end the month at a
median price of N$530k on account of
strong price movement in the lower price
segment. Overall price movements were
further aggravated by a shift in volumes to
the middle and upper price segment
adding further inflationary price pressure
in the northern property market. House
prices averaged N$2,100k in the upper
price segment, N$1,146k in the middle
price segment and N$503k in the lower
price segment. The year to data also
shows widespread inflationary pressures
in the northern property market with 11
out 17 northern towns posting price growth
in excess of 20% while the remainder posted single digit price growth through J une. However there were fewer
properties sold during the month, down 17% year on year due to supply weakness in the lower price segment.
This was partially offset by increased land delivery where 28 vacant stands mortgaged at a reasonably
affordable average price of N$152m, which was 31% cheaper than the same period last year. Land delivery
was even more encouraging with developers mortgaging 317,400m of land with a maximum yield potential for
740 free standing homes.
Southern property prices increased by
287% year on year to end the month at a
median price of N$702k, but with 5
properties traded in the month, one should
not read too much into this figure. The
year to date data suggests significant
price increases across all southern towns,
with property prices up 23% in Aranos,
22% in Keetmanshoop, 37% in Luderitz
and 30% in Mariental. This can be
ascribed to the weakening supply in the
southern market, where the already weak
supply has fallen by 48% over the past
year, which we suspect is due to
increased land delivery, which as
increased by 36% over the same period
and pushed down land prices by 31%.
The graph below shows that volumes continued to trend downwards through 2014. Volumes contracted for the
first time since December 2010. This was mainly due to short term volume weakness in the middle to upper
price segments.

-0.5%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
YoY Volume Growth
0
10
20
30
40
50
60
70
80
Land Delivery
Northern Coastal Central
Below are the annual median house prices for the major towns in Namibia and the percentage change in prices
over the past 5 years, 3 years and 2014 YTD year.

Median House Prices in Namibia

Year Relative Change
2009 2010 2011 2012 2013 2014 5 Years 3 Years 1 Year
Arandis 175 000 300 000

300 000 300 000 300,000 71%

0%
Aranos 510 000 577 500 450 000 475 000 500 000 800,000 57% 78% 60%
Eenhana 208 323 202 162 322 190 388 500 462 000 478,000 129% 48% 3%
Gobabis 320 988 383 000 481 500 608 500 620 000 630,000 96% 31% 2%
Grootfontein 315 000 280 000 308 900 500 000 455 000 500,000 59% 62% 10%
Henties Bay 500 000 563 500 687 500 780 000 837 000 975,000 95% 42% 16%
Katima Mulilo 240 000 286 000 275 000 326 350 430 000 834,840 248% 204% 94%
Keetmans 271 500 334 650 407 000 450 000 421 000 490,000 80% 20% 16%
Luderitz 231 000 432 000 280 000 398 500 413 800 375,000 62% 34% -9%
Mariental 302 500 350 000 400 000 461 200 418 500 475,000 57% 19% 14%
Okahandja 290 000 355 000 366 900 471 500 543 000 685,000 136% 87% 26%
Okahao 302 000 262 250 373 200 295 000 412 000 458,000 52% 23% 11%
Omaruru 555 000 775 000 650 000 650 800 480 000 1,165,000 110% 79% 143%
Omuthiya

349 600 331 500 343 000 402 000 493,000

49% 23%
Ondangwa 234 000 258 300 373 500 512 350 482 500 550,510 135% 47% 14%
Ongwediva 341 500 442 500 431 000 505 240 412 000 547,000 60% 27% 33%
Oshakati 310 000 486 300 475 000 416 000 420 000 621,000 100% 31% 48%
Oshikango 340 000 450 000 268 300 421 500 578 000 563,000 66% 110% -3%
Oshikuku 294 000 375 000 311 500 363 000 380 000 470,000 60% 51% 24%
Otavi

350 000 477 000 475 000 473 700
Otjiwarongo 322 170 377 500 447 000 592 500 678 928 720,081 124% 61% 6%
Outapi 235 600 223 350 296 000 371 000 422 400 530,000 125% 79% 25%
Outjo 410 000 378 000 400 000 470 000 527 000 792,500 93% 98% 50%
Rundu 210 000 280 000 320 700 331 000 401 000 534,653 155% 67% 33%
Swakopmund 469 500 612 000 580 500 700 000 787 500 935,000 99% 61% 19%
Tsumeb 341 000 360 000 470 000 505 550 661 500 720,000 111% 53% 9%
Usakos 160 000 180 000 206 000

430 000 360,000 125% 75% -16%
Walvis Bay 380 000 489 350 415 000 450 000 617 500 912,500 140% 120% 48%
Windhoek 472 000 544 000 682 500 800 000 980 000 875,000 85% 28% -11%
Namibia 381 000 450 000 480 000 609 750 640 000 720,000 89% 50% 13%

Land Delivery
Despite TIPEEG and the Mass Housing
Project, land delivery struggled to find
directions, with the near term data pointing
towards waning land delivery. A total of 61
stands were mortgaged through J une and
although an improvement from the May
figure, it was not enough to house the
growing population and thus adding
inflationary pressure to land prices which
were 23% higher at N$340/m. This was
evident in the central property market,
where 12 stands were mortgaged at an
average price of N$640/m and thus
representing a 53% year on year increase
in land prices in the central area. Coastal
land prices were a lot more affordable at
N$144/m along with a 15% year on year price increase. Northern land prices contracted by 53% year on year
to N$152/m, due to increased land delivery and encouraging developer activity. A further 393, 800m of land
was mortgaged by developers, with a maximum potential for 920 free standing homes
Mortgage advances

According to Bank of Namibia data, net mortgage advances decelerated to 11.6% year on year through J une.
This brings the total mortgage book to N$25.4bn for private households. Most of this growth was in the form of
further mortgaged bonds that accounted for almost one third of all mortgages advanced during J une, followed
by properties in the middle price segment, which grew by 22% year on year on account of increased volumes
and to a lesser extent the higher house prices within the middle price segment. Mortgage advances to the upper
price segment fell by 22% and thus accounted for 24% of total mortgages after accounting for as much as 41%
of total mortgages back in April. This decline was under pinned by falling property prices in the northern markets
upper price segment and falling house volumes in the coastal markets upper price segment.
Knight Frank Global House Price Index
Rank Country
12
month
6
month
3
month
Rank Country
12
month
6
month
3
month
1 Dubai 24.0% 7.4% 3.9% 29 Mexico 3.4% 2.4% 0.7%
2 Namibia 16.0% -0.5% -3.3% 30 Russia 3.2% 1.4% 2.0%
3 Turkey 14.0% 7.9% 4.7% 31 Hong Kong 2.5% 0.9% 1.3%
4 Ireland 12.5% 5.4% 6.8% 32 Denmark 2.3% 0.6% 0.3%
5 Colombia 12.3% 6.3% 4.6% 33 Netherlands 2.3% 1.1% 0.9%
6 United Kingdom 11.6% 5.8% 2.9% 34 Czech Republic 1.5% 0.7% 1.1%
7 Brazil 10.8% 4.0% 1.8% 35 South Korea 1.5% 0.9% 0.3%
8 Australia 10.1% 3.4% 1.8% 36 Switzerland 1.5% -0.3% 0.7%
9 Estonia 9.9% 4.4% -0.5% 37 Norway 1.4% 6.1% 3.8%
10 Iceland 8.4% 3.2% 2.1% 38 Morocco 0.4% -0.4% -1.9%
11 Israel 8.2% 5.4% 2.5% 39 Bulgaria 0.3% 0.6% 0.3%
12 Malaysia 8.0% 0.9% 0.3% 40 Germany 0.2% 1.6% 1.6%
13 Indonesia 7.4% 3.2% 1.7% 41 Belgium 0.0% -1.3% 0.2%
14 Taiwan 6.9% 3.9% 2.4% 42 Portugal -0.8% -0.8% 1.3%
15 Poland 6.8% -2.1% 0.3% 43 J apan -1.1% -0.5% 0.0%
16 Malta 6.8% 5.7% 1.8% 44 Slovak Republic -1.5% -0.3% -0.8%
17 South Africa 6.7% 3.4% 0.5% 45 France -1.6% -2.1% -1.0%
18 Sweden 6.6% 4.1% 2.5% 46 Finland -2.1% 0.7% 0.0%
19 Lithuania 6.4% 16.7% 8.7% 47 Hungary -2.4% -1.6% -1.0%
20 United States 6.2% 4.3% 3.1% 48 Singapore -2.4% -2.1% -0.8%
0
100
200
300
400
500
600
Millions
Mortgage Advances
Further Bonds Small Medium Large Trend
21 New Zealand 6.2% 1.7% -1.3% 49 Croatia -2.9% -2.2% 0.6%
22 Latvia 6.0% 3.9% 1.4% 50 Romania -3.3% -0.1% 0.6%
23 Austria 4.8% 4.2% 2.3% 51 Spain -3.5% -2.2% -0.5%
24 J ersey 4.8% 6.4% 4.6% 52 Italy -4.6% -2.5% -0.7%
25 Canada 4.4% 2.9% 2.2% 53 Slovenia -7.4% -4.8% -3.1%
26 Luxembourg 4.3% 2.7% 0.0% 54 Greece -7.9% -3.1% -1.4%
27 China 4.3% 0.4% -0.6% 55 Cyprus -9.2% -4.6% -2.0%
28 India 3.8% 4.5% 2.1%

The Knight Frank Global House Price Index shows that global property prices slowed down from 7.1% in the
first quarter to 5.2% in the second quarter. Therefore global house prices continued to trend upwards for 41 of
the 55 countries recording flat or rising house prices. Dubai tops the annual rankings for the fifth consecutive
quarter, recording annual price growth of 24%. Namibia slots in second place with annual price growth of 16%
on account of poor housing supply which plummeted in 2008 and has battled to find traction despite numerous
government interventions to increase new housing supply in the world second least populated country. The rate
of growth in the US slowed in the second quarter as the stimulus used to aid the economic recovery post 2007/8
was withdrawn. Although European countries continue to languish at the bottom of the rankings, their price
declines have moved from double digit territory while some countries have separated from the bottom of the
rankings and have moved to the top.

Conclusion
House prices continued to increase while volumes continued to decline. Municipal construction data continued
to disappoint particularly with regards to new houses completed. This persistent supply shortage is pushing up
local property prices to the second highest price increases in the world. Further supply weakness is expected as
the coastal market moves into its seasonal dip. However, developer activity was encouraging during J une and
hopefully this will translate into increased land delivery in the medium term. But for now, the market remains
grossly under supplied and therefore house prices are expected to continue on the upward trajectory and end
the year 15% higher than the same period last year on the back of above average economic growth, robust
consumer demand and stronger mining exports to boost household incomes.
Methodology
This report covers the developments in the national housing market, based on bonds registered for natural
persons at the Deeds Office. The median is used as the central measure of tendency and has been smoothed
using a 3-month moving average and weighted. Bonds smaller than N$100,000 and further mortgage bonds are
excluded because they may not reflect the true cost of housing and as such may distort the index. Of course, it
must be remembered that this index reflects the median price of properties that were traded over this period.
This limitation of not being able to get to average prices about the stock of housing is a perennial challenge for
housing indices.